President Uhuru Kenyatta declared the five counties of Nairobi, Kiambu, Kajiado, Machakos, and Nakuru as “disease-infested areas” and put them under lockdown. There is a cessation of movement in and out of these five counties.
The announcement by the head of state got many economic sectors unaware, pushing them off the balance leading to massive losses. Some like the hotel sector are shutting down with no hope of ever opening their doors again.
On the first day of the partial lockdown, the Nairobi Securities Exchange (NSE) lost a whopping 80 billion shillings. This was the biggest one-day loss in the history of NSE as investors panicked and sold their shares in blue-chip companies.
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The market capitalization at the NSE closed at 2.47 trillion shillings compared to 2.55 trillion shillings on Friday. On the first day, Safaricom, East Africa Breweries Limited (EABL), and the big banks led in shedding value in the wake of the sell-off.
The blue-chip stocks are a favorite of foreign investors who over the past few weeks have been buying shares at the NSE, pushing the value of the bourse to pre-pandemic levels. The markets had just started blooming when Uhuru Kenyatta hit.
“Markets are often affected by two things; panic and speculations. Faced with an unknown future, foreign investors had to ‘panic’, sell their shares, and ‘hide’ their wealth in other lucrative ventures such as gold,” said an investment analyst.
At the NSE, Safaricom, Equity, EABL, KCB, and Cooperative Bank shares account for 79.8 percent of the total wealth. On day one, their wealth fell by between 2.96 percent and 8.51 percent, collectively cutting the market capitalization by 74.51 billion shillings.
It is not known when the lockdown will end. The markets will continue swimming in doubt.